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Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance: Debit Credit
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2017. As of that date, Abernethy has the following trial balance: Debit Credit 57,300 $ 42,200 50,000 214,000 82,250 250,000 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory Land Long-term liabilities (mature 12/31/20) Retained earnings, 1/1/17 Supplies Totals 375,000 90,500 117,000 170,000 409,650 16,000 $936,950 $ 936,950 During 2017, Abernethy reported net income of $117,500 while declaring and paying dividends of $15,000. During 2018, Abernethy reported net income of $171,250 while declaring and paying dividends of $55,000. Assume that Chapman Company acquired Abernethy's common stock for $860,500 in cash. As of January 1, 2017, Abernethy's land had a fair value of $132,000, its buildings were valued at $287,600, and its equipment was appraised at $352,500. Chapman uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2017, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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